Trump's Fed Chair Remarks Create Shifts in Bitcoin Price Outlook and Market Expectations

U.S. President Donald Trump said on January 17, 2026, that he may prefer to keep Kevin Hassett as the White House economic advisor rather than appointing him as the next Federal Reserve Chair. Hassett had been widely seen as a top contender for the role. Trump described Hassett as 'so good' and expressed concern that moving him would 'lose' his communication skills according to reports.

The comment came during a White House event where Trump was addressing a broad range of topics. Hassett, who is currently the National Economic Council director, was in attendance and had recently appeared on Fox Business Network.

Following the remarks, prediction markets reacted quickly. Polymarket data showed Hassett's odds of becoming the next Fed Chair dropped to 16% from 36% earlier in the day, while former Fed Governor Kevin Warsh's chances jumped to 59%.

Why Did This Happen?

Trump's comments were widely interpreted as a shift in his stance. Earlier in the year, Hassett had been considered the front-runner to succeed Federal Reserve Chair Jerome Powell. Hassett is known for a more dovish economic outlook, which has historically supported expectations of interest rate cuts. In contrast, Warsh is viewed as a more hawkish figure, favoring higher interest rates for longer.

The White House's recent pressure on the Federal Reserve has been a topic of debate, with the Justice Department issuing subpoenas and suggesting potential criminal charges against Powell. Senate Republicans have largely supported Powell and shown resistance to Trump's actions.

How Did Markets React?

The market quickly re-evaluated its expectations for 2026 interest rate policy. CME FedWatch data indicated reduced probability of two rate cuts, with a 32.1% chance of a 50-basis-point cut and 30.3% for a 25-basis-point cut.

Bitcoin (BTC) is trading at $94,676.55 with a market cap of $1.89 trillion, and 24-hour trading volumes are listed at $41.34 billion. While BTC and Ethereum (ETH) have remained relatively stable in the face of the Fed news, some analysts suggest the shift in expectations could influence investor sentiment and asset valuations.

Gold turned lower after Trump's comments, as the market moved away from dovish expectations for the next Fed Chair. The dollar pared losses, Treasury yields advanced, and gold fell as much as 1.7%.

What Are Analysts Watching Next?

Analysts are assessing how these developments will affect the broader financial markets. James Butterfill of CoinShares expects Bitcoin to trade between $120,000 and $170,000 in 2026. He noted that while the next Fed Chair is likely to favor lower interest rates, markets will wait for clarity before adjusting valuations.

Kevin Warsh, while having prior involvement with crypto firms, is generally seen as a more hawkish figure compared to Hassett. His potential appointment would likely shift expectations toward tighter monetary policy and could affect the valuation of digital assets in the short term.

Investors are advised to monitor Trump's next steps regarding the Fed Chair nomination, as well as any developments in the ongoing DOJ investigation into Powell. Political dynamics continue to influence financial markets, and shifts in leadership could have significant implications for monetary policy and digital asset prices.

For now, the clash between Trump and Powell has injected fresh momentum into crypto trading. Whether that momentum evolves into a sustained trend will depend on how much of today's speculation turns into tomorrow's policy reality.